A reformulation of Mayer's cluster integral approach to statistical mechanics, which was derived earlier in the project and which describes not only the gas but also the liquid phase of a simple fluid as well as the intervening vapor-liquid phase transition, will be developed and extended so as to provide a comprehensive theory of water. Our aim is to apply this theory to understand the entropic and energetic effects which determine hydrophobic bonding in biological macromolecules in water. A rigorous theory of the conformations and associations of biological macromolecules, as stabilized by such hydrophobic interactions in water, will then be possible. Our immediate goals are (l) to make use of our reformulation of Mayer's theory as a tool in understanding the volume-dependence of the cluster integrals which determines the equilibrium properties of the liquid phase, (2) to understand more precisely why Mayer's approach failed to describe the liquid phase, so as to develop convenient approximations to our reformulation which are valid in both gas and liquid phases, and (3) to generalize our reformulation of Mayer's theory so as to encompass molecules such as H2O, which interact with non-spherically symmetric pair potentials.